Do you want to see one of the worst forecasts you'll ever hear at an economic inflection point? Leave it to "eighth inning" Fed President of Dallas, Richard Fisher:
May 29 (Bloomberg) -- Federal Reserve Bank of Dallas President Richard Fisher said the U.S. slump will probably persist until next year as consumers restrain spending, while the outlook for inflation remains “meek.”
The economy faces a “very slow slog” to recovery, Fisher said yesterday in a speech in Washington. The recession “will moderate in the current quarter, and then we are likely to bounce along the bottom for a while,” with sustained growth doubtful before the end of this year, he said.
A very slow slog? What a funky foggy forecast. What planet is he on? He probably would of thought that the Chrysler bankruptcy would also last at least a couple of years. After all, isn't that what CNBC's fearless forecaster, Maria Bartiroma intoned just a few weeks back?
It's not a slog, when it's not your money!
And the recovery gets jump started by those who are using OPM! Just look at the markets! Even the Fed is.
In fact, look what the Fed sees in today's WSJ:
WASHINGTON -- Federal Reserve officials believe the recent sharp rise in yields on U.S. Treasury bonds could reflect a mending economy and a receding risk of financial catastrophe, suggesting the central bank won't rush to react -- even though some investors see danger in the government's rising cost of borrowing.
Now we know that on the Fed's last meeting, they couldn't see any inflation:
In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
But didn't Barney Frank have to talk for Bernanke yesterday, and tell the world that he was on alert for inflation's shoots?
So why would it be any different with Fisher's "very slow slog" forecast?
Now we had a huge move in India's market last week because of the "elections." Now we see that India's GDP grew at a 5.8% clip in the latest quarter, far above the 5% estimates, and that the previous quarter's growth was also revised up to 5.8% from 5.3%.
Higher oil prices will also markedly help Russia's economy.
Brazil is already smoking, and China's stimulus is working. So why would our recovery be a "very slow slog?" The BRIC's are already in place!
Oh that's right. It's because 1 in 12 mortgages in this country are behind on payments, or in foreclosure.
That's also a stimulus.
1 out of 12 families will now be able to live in their homes for the next year, without making a payment, while the courts are bogged up with the foreclosure process.
Now what happens when these families look for a place to rent?
Do you think they'll be able to negotiate rates downward like Starbucks, who is demanding 25% cuts in rent?
But with no homes being built, and rates moving upwards, it will force homebuyers to make some decisions for once in their life, instead of walking around and kicking the tires of every home in their neighborhood.
And every housing bear, that tells you that prices are coming down from here, is just like the oil bears only three months ago, who were telling us that the oil in tankers, would preclude it from rising.
How well did that workout?
And with Fisher telling the world that the economic recovery will be a "very slow slog" the one thing that you can count on, will be that this forecast will be entirely wrong.
Because the recovery will be much faster, much stronger, and much more encompassing than these forecasts made by those in academia who couldn't see the one of the greatest crashes coming, who now, paradoxically, can't see it's recovery.
Even though everyone in the stock market here, and around the world can see it, except this nation of bearish bloggers!